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Protectionism no painkiller for Europe

By Shang Jun, Wu Xia (Xinhua)

17:08, May 16, 2013

BEIJING, May 16 (Xinhua) -- The European Commission warned Wednesday it stood ready to launch an anti-dumping and anti-subsidy probe into mobile telecommunications equipment imports from China.

Read: Telecoms probe hurts Chinese, EU interests: MOC

It marked the second time in a week the European Union (EU) had flexed its trade muscles against China, arousing concerns that protectionism is on the rise in the 27-nation bloc.

The EU's executive arm decided Wednesday last week to slap a hefty 47 percent punitive tariff on Chinese solar panels. It affects about 21 billion euros (27.6 billion U.S. dollars) worth of Chinese exports, making it the EU's largest anti-dumping case to date.

Both are high-profile cases not only because a significant amount of trade is at stake, but open new fronts for trade friction between the two economic powers by targeting the rising industries of information and clean energy, instead of sunset ones such as textiles and shoes.

The latest offensive measures have been taken at a time when the EU is still struggling with a sovereign debt crisis and the temptation for protectionism is growing strong.

According to official figures, the EU is plagued by the longest economic contraction since records began in 1995, with gross domestic product (GDP) falling 0.7 percent in the first quarter year-on-year.

History has shown that a crisis is a breeding ground for protectionism, but a protectionist approach is certainly no painkiller for economic woes.

The sovereign debt crisis, which has dragged on for nearly four years with no end in sight, is a wake-up call to the EU that some of its member states are losing their competitive edge in an increasingly globalized world.

Building trade barriers is a cheap way to protect European businesses and soothe domestic anger in a crisis, but the approach runs counter to a solution to the crisis, which calls for painful and sometime politically risky reforms to improve the competitiveness of EU economies.

A more vibrant Europe can only be built on a free market with an open environment for competition, not expulsion of outside rivals. By sticking to its pledge to keep markets open, the EU is in fact helping itself.

The latest case is apparently aimed at Huawei and ZTE, China's two leading telecommunication system and equipment providers, which serve customers across the world and cooperate with many European partners.

By launching an investigation on its own initiative into Chinese products for the first time, the European Commission is signaling it stands behind the rising protectionist force in Europe, and the aggressive approach risks a tit-for-tat trade war, which is in neither side's interests.

The European Commission said its decision would not be activated for the time being to allow for negotiations toward "an amicable solution" with China, but with a threat of trade punishment, it can hardly be called amicable.

As two economic powers in the world and leading trade partners, China and the EU have every reason to maintain a stable environment for bilateral trade and work jointly to unlock the huge potential for further cooperation.

Protectionism can not save an ailing Europe and it is unwise to win a little only to lose a lot.

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